VOL. 127 | NO. 81 | Wednesday, April 25, 2012
Regions Financial Q1 Profit is $145M, Beats Street
BIRMINGHAM, Ala. (AP) – Regions Financial Corp. gave out more mortgage loans to its customers and commercial loans to businesses in the first three months of the year, which helped the bank post more than eight times the profit it reported last year.
The regional bank said Tuesday it earned $145 million, or 11 cents per share, beating expectations of 8 cents a share from analysts surveyed by data provider FactSet. In the 2011 quarter, Regions reported net income of $17 million, or a penny per share.
Regions' stock rose over 4 percent to $6.39 in late-morning trading.
One of the key developments in the quarter was that Regions Financial was given the green light from the Federal Reserve to repay the $3.5 billion bailout money it received during the financial crisis, becoming one of the last large regional banks to repay the government.
The Fed had been reluctant to allow the Regions to repay the money because of deep losses at the bank from poorly-written residential and commercial real estate loans made during the housing bubble.
To help boost its balance sheet, Regions has been selling its non-core businesses and raising cash. In April, the bank completed the sale of its brokerage division Morgan Keegan to Raymond James Financial for $1.2 billion. It also raised $875 million by selling shares.
Like many other banks that have already reported results, Regions Financial also wrote more mortgages loans in the quarter. That's because rates were at historic lows and the government extended a refinancing program.
The average rate on the 30-year fixed mortgage dropped to 3.87 percent in February, the lowest since long-term mortgages began in the 1950s. The government also extended its Home Affordable Refinance Program, which helps Americans who owe more than their property is worth get more affordable loans.
Regions said gave out $2.3 billion in consumer loans, mostly mortgages and some auto loans. Its mortgage revenue increased 35 percent.
Regions' loans to commercial and industrial customers increased 8.1 percent to $10.3 billion, as business owners appeared willing to invest in their companies in the face of a slowly improving economic climate.
In the first quarter, Regions said its earnings from traditional banking operations like deposits and loans, also called net interest income, was $827 million, compared with $855 million in the same period last year.
Its earnings from fees and service charges, also called noninterest income, totaled $512 million when excluding gains from the value of its securities. That compares to $498 million in the same quarter last year.
The bank set aside $117 million in the quarter for future loan losses, the lowest quarterly loan loss provision in more than four years. That's because more of its customers were paying bills on time. Charge-offs, or loans written off as uncollectible, declined $98 million, or 23 percent from the fourth quarter.
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